Transportation & Logistics International - Winter 2017 - 9
Why delivery and logistics startups are failing.
- By Joel Ritch
Commerce launched an unprecedented demand by consumers for merchandise not seen in the shipping and logistics industry prior. The attitudes of, and
behaviors by, consumers on the other end
of a package have changed dramatically.
On top of all of that, established shipping
and logistics companies traditionally are
not at the front of the pack leading with
innovation, which means there has been a
lot of room for improvement.
Investors have put more than $730
million into delivery startups from early
2014 through the first half of 2015, making last-mile delivery a highly contested
battleground, with dozens of startups
vying to win the game. So with all of the
room left by traditional companies and
the injection of funding, why can't tech
startups disrupt the logistics industry?
The crucial last-mile of delivery accounts for the majority of a shipment's
cost and complexity, and is fraught with
inefficiencies. Complexity is the No. 1
reason delivery and logistics startups
are failing. Startup companies have
underestimated the resources needed
to build a successful logistics-driven
business from the ground up.
There are plenty of companies in the
space, early-stage and long-standing
businesses, but comparatively, even
the companies that are doing well and
gaining traction still have a ways to go.
Shipping and logistics is not an easy task.
Above and beyond the complexity
issue, there are additional barriers to
startups disrupting the logistics market.
More Than Technology
Shipping and logistics, like other, more
traditional industries, continue to be
impacted by technology. With technology leading the charge in the disruption
of the industry, startup technology
companies have seen an increase in both
interest and funding. As a result, these
companies are having a positive influence on the industry.
Many of the technology startups have
brought innovations and solutions to
market that have improved efficiencies
and optimized processes, not to mention
Let's also look at the other side of the
technology coin. Experts within the
shipping and transportation industry
have noticed an increasing trend toward
the "Uber-ization" of shipping with
mobile application technology advances. While these are helping companies
// Technology is driving greater innovation
within the shipping and logistics sector,
but it can be a double-edged sword.
WINTER 2017 TLIMAGAZINE.COM